Despite huge drop in metro home sales, median price up

Home sales in the Twin Cities dropped a whopping 42 percent last month - from July the year before, but the median price of homes sold last month actually increased by about two percent.

Jeanne Boeh, the chair of the economics department at Augsburg college in Minneapolis, said the increase was driven by the sales of higher-end, million-dollar homes, and overall, the glut of inexpensive homes is keeping prices down.

"A traditional sale sells for around $222,000, but ... a short sale, where people are selling for less than the mortgage is worth with the lender's approval, that's at about $150,000 and an actual foreclosure is around $120,000," she said. "So, we need to get rid of all of those homes, and those are still over 40 percent of all the homes for sale in the Twin Cities."

The National Association of Realtors says sales of existing homes nationwide plunged in July to their lowest rate in 15 years.